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Labour to bring back 50p tax rate

A future Labour government would restore the 50p tax rate for those earning over £150,000 a year, Shadow Chancellor Ed Balls has said.

The previous Labour government created a new 50 per cent tax band in 2010 for anyone with income of more than £150,000 a year, but this was cut to 45 per cent by the coalition government in April 2013.

Balls said: 'When the deficit is still high, it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut'. He said Labour would seek to get the deficit down by 'reversing this unfair tax cut for the richest one per cent of people in the country'.

The Institute for Fiscal Studies said that although people with incomes over £150,000 represented just one per cent of taxpayers, they paid 25-30 per cent of all income tax. Restoring the 50p could therefore potentially raise about £3.5 billion in 2015-16: but 'behavioural changes' by those affected risked reducing this gain to about £100 million.

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